Governance

As a telecommunications operator that provides social infrastructure, the Company has the important social mission of providing stable telecommunications services on an ongoing basis, 24 hours a day and 365 days a year, regardless of conditions. Furthermore, our telecommunications business derives from utilizing radio waves―an important asset shared by all citizens. Accordingly, we recognize that we have the social responsibility to address the issues society faces and seek to resolve them through telecommunications business. Attaining sustainable growth and increased corporate value over the medium to long term is essential to achieving this social mission and social responsibility. Furthermore, we strive to engage in dialogue with all our stakeholders (including customers, shareholders, business partners, employees, and local communities), and work in cooperation to proactively address societal issues. In this manner, we aim to contribute to the development of a safe, secure, and truly connected society. We recognize reinforcing corporate governance as important to achieving sustainable growth and increasing corporate value over the medium to long term. Accordingly, we are in accordance with the tenets of the "Corporate Governance Code" defined by the financial instruments exchanges.
While maintaining transparency and fairness, we endeavor to enhance our structures for ensuring timely and decisive decision-making. In addition to our corporate credo and the KDDI Group Mission Statement, we have formulated the "KDDI Group Philosophy," which defines perspectives, values, and a code of conduct that executives and employees should share. We conduct activities to promote awareness of this philosophy throughout the Company.
By proactively adhering to Japan's Corporate Governance Code and practicing the KDDI Group Philosophy as two basic pillars of corporate management, we will endeavor to enhance corporate governance throughout the KDDI Group, including its subsidiaries, to achieve sustainable growth and increase corporate value over the medium to long term.

To achieve sustainable growth and increase corporate value over the medium to long term, we are continuously working to strengthen our corporate governance, and we comply with all corporate governance codes.

We believe strengthening corporate governance to be one of the most vital issues in enhancing corporate value, and we are working to improve management efficiency and transparency.
KDDI is currently a company with Audit & Supervisory Board, and in order to properly manage business execution, we have introduced an executive officer system to assign authority, clarify responsibilities and ensure effective and efficient business operations. We are also working to establish a framework for internal decision making to ensure timely management decisions. The number of directors is 12 (10 male and 2 female), including 6 outside directors, 4 of whom are independent directors, meeting the criteria for the ratio of independent outside directors (1/3 or more) required of companies listed on the Tokyo Stock Exchange Prime Market under the Corporate Governance Code. The Audit & Supervisory Board consist of 5 members (all male), including 3 Outside Audit & Supervisory Board members, who are designated as independent auditors. Regarding independent directors, the Company has a total of 7 independent directors and auditors, ensuring a high degree of independence.
For the outside directors/auditors, we provide opportunities for each area's supervisor to explain industry trends, together with our organization, businesses, technologies, and future strategies in a manner that deepens their understanding of the Company and stimulates discussion at Board of Directors meetings. Additionally, the Company provides individual training sessions when requested by outside directors/auditors, ensuring there are sufficient opportunities to receive training and improve knowledge where necessary. Plus, we also provide access to in-house exhibitions of R&D achievements, alongside site visits to telecommunications facilities, monitoring and maintenance centers, and other key faculties.
We report twice a year on corporate ethics, risk management activities, and internal audit processes. Moreover, in order for outside directors to strengthen their ability to gather information, they are invited to attend meetings of the Audit & Supervisory Board when the auditing firm reports the results of the second-quarter review and the year-end audit, and liaison meetings with Audit & Supervisory Board members are held twice a year. In addition to the above, to strengthen information exchange and sharing between outside directors, we hold liaison meetings exclusively for outside directors and liaison meetings for outside directors and part-time Outside Audit & Supervisory Board members.
We aim to raise the effectiveness of the Board of Directors' supervision of management and invigorate discussions of management strategies at board meetings by providing a deeper understanding of our business through these initiatives.

Corporate Governance Framework

Changes in the Corporate Governance Framework

1. *1Number of people at the conclusion of each Annual General Meeting of Shareholders
2. *2Number of people at the launch of KDDI in October 2000
3. *3Independent directors/auditors pursuant to Rule 436-2 of the Securities Listing Regulations of Tokyo Stock Exchange, Inc.

In addition to the requirements in the Companies Act and the standards provided by financial instruments exchanges we have formulated our own standards for judging the independence of outside directors/auditors. Specifically, we consider those belonging to business partners that account for 1% or more of the company's consolidated operating revenue or orders placed not independent.

At the Board of Directors, to balance the fairness of management decisions and the steady promotion of growth strategies, internal directors who are responsible for each area fulfill their accountability in the decision-making of important matters and management plans stipulated in laws and regulations. The directors are making decisions that ensure effectiveness and fairness through active discussions that utilize the insights of external officers with various backgrounds.
In addition, the Board of Directors regularly reports on the progress and achievement of the Mid-Term Management Strategy and annual plan that underpin company operations. Deliberations are conducted with a focus on strategies to achieve key goals and measures, as well as to addressing management issues arising from business environment changes and other factors, with the aim of achieving sustainable growth and increasing corporate value over the medium to long term.

The KDDI Audit & Supervisory Board is composed of 5 members, including 3 outside members. Audit & Supervisory Board members conduct audits in accordance with the audit policy, execution plans for auditing, audit methods and work assignments determined by the Audit & Supervisory Board. All 3 Outside Audit & Supervisory Board members are independent auditors.
Full-Time Audit & Supervisory Board members attend meetings of the Board of Directors, as well as the Corporate Management Committee and other major meetings (Management Strategy Meeting, Monthly Profitability Review Meeting, KDDI Group Business Ethics Committee, etc.) to perform their audit duties, and express their opinions, as necessary. In addition, in order to ensure sufficient communication with Representative Directors and to deepen mutual recognition and trust, they exchange opinions with Representative Directors twice a year on important audit issues, improvement of the auditing environment for Audit & Supervisory Board members, audit results, and requests related to audits.
Part-time Outside Audit & Supervisory Board members receive reports on and discuss the auditing methods and results of the full-time Audit & Supervisory Board members at the Audit & Supervisory Board meetings, receive explanations of management policies and growth strategies at Board of Directors meetings, and express their opinions as appropriate from their standpoint as independent auditors. In addition, to promote communication with Representative Directors, roundtable meetings are held twice a year to exchange opinions.
In addition, Audit & Supervisory Board members obtain a written explanation of the audit plan, which includes the audit policy, audit plan, and audit system of the accounting auditors, and they also receive explanations and exchange opinions on the content of the explanation. Furthermore, the Company receives quarterly reports from the accounting auditors on the methods and results of audits (including quarterly reviews) and holds discussions with them. In addition, the Company communicates with the accounting auditors as necessary and exchanges opinions to contribute to the formation of mutual audit opinions.
The Audit & Supervisory Board Member's Office has been established as a division to assist the Audit & Supervisory Board members in their duties. The Audit & Supervisory Board Member's Office has dedicated employees, and each Audit & Supervisory Board member has the right to direct and order these employees, with the prior consent of the Audit & Supervisory Board or a full-time Audit & Supervisory Board member as determined by the Audit & Supervisory Board.

To ensure the transparency and fairness of systems and standards for nomination of directors and Audit & Supervisory Board members and their executive remuneration, we have established the Nomination Advisory Committee and the Remuneration Advisory Committee, which deliberate and provide advice to the Board of Directors based on discussions thereof. The chair, vice-chair and more than half of the members of these committees are independent outside directors.

We collaborate with our group companies to manage their governance through various systems and frameworks in order to enforce the governance of the whole KDDI Group.

KDDI appoints people who meet the following criteria in consideration of gender, age, nationality, race or ethnicity to ensure a diversity of opinions and highly specialized knowledge within the Board of Directors as a whole when making decisions including important management matters and implementing oversight as required by law.

From the perspective of achieving sustainable growth for the KDDI Group, KDDI defines six skills in areas of expertise and experience that we believe are important for our directors and Audit & Supervisory Board members. The skills possessed by each director and Audit & Supervisory Board member are as follows.

To ensure active discussions in the Board of Directors meetings, we inform outside directors and part-time outside Audit & Supervisory Board members at least 3 days in advance of the dates and agenda items and provide agenda materials for upcoming meetings to help them gain a deeper understanding of the agenda in advance. In addition, we make the deliberations more substantial by accepting questions beforehand and preparing more extensive explanations for the meetings based on the questions.
We established the Audit & Supervisory Board Member's Office, which supports Audit & Supervisory Board members, including part-time outside members.

One of KDDI's subsidiaries, Okinawa Cellular Telephone Company (hereafter "Okinawa Cellular"), is listed on the Tokyo Stock Exchange Standard Market.
Being committed to "growth as a group," KDDI aims to maximize mutual synergies and expand and strengthen new growth foundations for the entire group by maximizing the use of our assets and supporting the growth of group companies.
Okinawa Cellular was established with the cooperation of several prominent local companies, making it a community-based company that contributes strongly to the local community.
Based on this background, we believe that there are the following advantages to having Okinawa Cellular as a publicly traded company, and we believe that it continues to be significant to have Okinawa Cellular as a listed subsidiary.

KDDI believes that participating in tie-ups with a variety of companies is essential to providing our customers with increasingly diverse and advanced services.
KDDI possesses strategic shareholdings if such possession will contribute to the sustainable growth of KDDI's business and the medium- to long-term increase of corporate value.
Every business year, the Board of Directors reviews all the pros and cons of continuing the possession and the number of shares to be held of each individual strategic holding by judging its significance and economic rationale. When a strategic shareholding is found to have only tenuous significance, KDDI will sell or reduce as promptly as possible.
KDDI calculates the ratio of the contribution by the issuing company to the KDDI's profits within the most recent fiscal year. The economic rationale is verified by comparing the ratio with the valuation of each strategic shareholding at the end of the most recent fiscal year, and confirming whether the ratio satisfies the capital cost standard established by KDDI.

We consider our shareholders and investors to be especially important stakeholders who fully understand and strongly support our business sustainability. Accordingly, we put the highest emphasis on building trust-based relationships with them in our management and strive to practice value-oriented corporate management, active information disclosure and enhanced communication.
As part of our ongoing effort to improve communication, we hold quarterly presentation sessions, where the management team presents KDDI's financial results directly. In addition, we organize private meetings and small-scale meetings with investors from both Japan and abroad and attend various conferences hosted by securities firms.

Adoption of Takeover Defense Measures Not adopted